Not sure if this thread will catch on, because no-one here seems to have much to say about individual british banks, but thought i would add this header to see if we could discuss dividend yields, exposure to sup-prime, good ones, bad ones, take-over targets, when the crisis will end? do you think they have learnt their lesson? I, for one, as a property developer have seen first hand how much stricter they have become with lending habits, struggling to get decent rates for re-mortgaging, basically they appear scared to lend to anyone.

hyleo,
general consensus within the industry is that Barclays will be the next to pop their heads above the parapet.
They are certainly the ones closest to breaking the capital adequacy rules.

BARC didnt pursue their bid for ABN/AMRO and overpay like RBS did, Fred the shred should go and take his megalomanic style of management with him.

HBOS won't be far behind Barclays, I wonder how prudent the share purchases will look by the board of HBOS in a few months time. They will need to dip into there pockets again after a rights issue. I believe the AGM Statement is due soon, it could make interesting reading re any writedowns.

Shock, Horror!!!!

I have just been discussing the current mortgage crisis with a lender (not a bank), who must remain nameless for confidentiality purposes.
They are telling me something that goes totally against everything in the industry.
They have actually said they have plenty of money available to lend, but too few applicants for the money.
They are a balance sheet lender, unexposed to the LIBOR turmoil, but it was an astonishing thing to hear. Does this mean the UK appetite for spending someone elses cash has disappeared? That would be a bigger issue than any credit crisis.

Sounds like nonsense to me , they would say that wouldn't they!!

Think what you like, halifax.
I am in the industry, I know these people, I am not in any way connected, they have no reason to speak nonsense.
They are a balance sheet lender. This is a very different animal to the leveraged lenders.
I see material from banks restriciting criteria and lowering LTV's. I see material from these guys offering more considerate underwriting and special offers to attract borrowers. They are very niche with their products, but the niche is to attract serial non payers, unusual properties and "outside the box" lending. Just the areas that should be booming.
Anyway, you know best.

Lending to serial non payers sounds good to me!!

hewittalan6. on what terms would this niche player be lending. It is no secret that the consumer is being squeezed, and perhaps many have now finally learnt that they must cut their coats according to the cloth. I do not doubt what your contacts say but I suspect that the money is not cheap.

Guscavalier suggest you try John Charcol.

You're right, Gus. The money is not cheap, but their lending falls into 2 categories.
They offer the unlimited adverse stuff which is used as a last chance saloon. I expect this particular bar to be full to overflowing by now. If you face the choice of repossession, or a change in lender and higher rates, most people (rightly or wrongly) try to rescue the situation by moving the loan. Usually this just puts off the inevitable, but the lender makes money.
The other arm(s) offer rapid financing for smaller developers and speculators. Traditionally, this is more risky, but with high rewards and other lenders would not go there due to the risk factor.
So in truth, though they are costly, the rewards are high and those using them know that. The odd % made little difference.

As for Charcol. Watch this space. Suffice to say that small brokers with very low overheads are struggling and reigning in spending. How would they manage if they had impressive head offices and huge amounts of backroom staff?

I am surprised there is any lending ( ie still standing), with piles of cash about. Add-in that is is not LIBOR ( mentioned here) and we have to conclude this is Savers' Deposits. . . . . i.e. the traditional BS model.

I'm not surprised folk are avoiding moving house ( with all the charges that involves) - particulalrly if all they are doing is move up-market. Stayiing put and building an extension, or having a last-minute foreign holiday - are "sweeter" ways to spend far less.

(This ignores folk who have to move for Job-reasons, but I suspect these are relativly few and many are assisted by the employer).

Therefore, it looks like traditional BS model is still working . . . so what is the issue with UK-Banks?
1) Banks are not lending to each other, fearing the borrowing bank's defaults may reduce their ability to repay loans.
2) They appear to have a large number of Mortgages on their books, some if these may turn bad - let's suggest this is about 5% - more than enough to wipe-out any profits.
3) The BoE ( or the Labour Government ) - wants to "do something" and the Banks have suggested the BoE takes-on these Mortgages......in exchange for cash....which (presumably) they can lend out at current/higher rates . . . . . thereby making up for their stupidity and losses on these Mortgages.

It seems to me that if Banks want to be shot of their Morgages - and the BoE is willing to provide Cash - We'd better take cover!

This is likely to end-up costing the Public far more.

IMHO Banks should NOT be allowed to continue to trade in this "profit-driven" risk-ignoring manner......it is self-evident that NRK was more than a wake-up call - it demonstated that Bankers are potentially grossly incompetant - it remains to be seen where the blame lies, but I like to follow the money - who was being paid the most? Which employees benefited from these Mortgages which were not backed by long-held cash?

Grr!

Hangon,
The lender i mention is not BS based, nor is its business, beyond that I say no more, other than it is deposit based.
The BS model does work though, and this is evidenced by the regional lenders who were offering loans across the UK who are now offering broadly similar product, but only at a local level.
Perhaps the argument was whether the capital adequacy requirements were wrongly set. They are at 4%. Any higher and the whole UK system would be doing either a NRK or as RBS, or, more likely, lending would have been stricter, earlier. If they were lower, the LIBOR markets would be freed up.
Trying to remember the figures from Tuesday, but the banks were arguing that we will not follow the USA to the same degree because secured lending in the UK accounts for about 1 Trillion, compared to about 3 Trillion in security, whereas the ratio for Uncle Sam is much higher.
Can't remember the figures exactly, so forgive me, but it would take much more here to create a situation where secured debts started to look insecure.

I think the banks have had their wake up call Hangon. The fact that they have /or will be asking shareholders to subscribe to rights issues means that, quite rightly, the risks are shared with shareholders as well as the taxpayer. The outlook has changed and they cannot afford to go back to the lax ways of doing business. There will be no difficulty of obtaining funds where a good level of security is involved but, I believe, it will continue to get more expensive for riskier business. This is how it should be and how it used to be. Once the dust settles it will be a good time to invest and we may then see more sovereign wealth fund interest. All we need is some good timing.(easier said than done).

HELLO GUYS,,ANYONE HAVE INFORMATION OF NORTHERN ROCK COMPESATION, APRECIATE ANY FEED BACK!!!!1

ANYONE SEEN THE MASSIVE LOAN PLACARDS IN SAINSBURYS...THEY SEEM TO BE GIVING MONEY AWAY LIKE WATER EVEN IF THE BANKS AREN'T

cobras, there isn't any, unless future court action is successful. See http://business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article3803540.ece. The government's position is that the firm would have been bankrupt if they hadn't helped it. A lot of water still to go under the bridge.

Following on from post 77.

A particular mortgage broker / club announced on Friday, a restructuring of its business in order to reduce overheads and costs.
While not (quite) as big as Charcol, it is still well inside the top 10 in the UK, and is backed by the Skipton B.Soc.
All are very insecure at the moment.
Meanwhile, the dullards at the FSA are not helping matters at all. They are known throughout the financial world as the "business prevention unit" and they are living up to their name.
Lenders and brokers alike are needing to reduce costs and overheads. If they can, then mortgage product can be made a little cheaper, and criteria can be loosened a little. More affordable and easier lending is what the economy is on its knees begging for. The FSA reaction is to increase paperwork and make lending harder.
Latest focuses include;
Affordability. Income multipliers are not necessarily enough, now. A full investigation of expenditure is now required on all but the cleanest cut cases. This increases documentary evidence and the time spent processing any cases. The reason is that the FSA believe people who cannot afford their mortgage are not to blame. The lender and broker are, and should be sued for bad advice!! Lenders and brokers therefore have to pull in their horns, have huge amounts of paperwork to back up their advice and set aside large amounts of capital to deal with the unjust complaints.
Interest only. These mortgages were popular among first time buyers who could just afford the interest, but not the full repayment mortgage. It got them on the ladder. The FSA believe this is bad advice and interest only should never be recommended or sold unless there is full evidence of sufficient savings to repay the debt. This is leading many brokers and lenders to walk away from loans where interest only is the best or only option, for fear of reprisals.
Because of this, professional indemnity insurance companies are raising premiums dramatically.
End result? Higher costs and less lending than ever.
Why? Because the FSA, in their wisdom, do not believe the customer can work out for themselves if they can afford a bill. It must be the bank or broker to blame.
It is time that the FSA was disbanded for good, the financial regulation areas was handed to a branch of the fraud office (because that is the only area where government should interfere with peoples personal finances) and we taught the population that the freedom they cherish so much includes the freedom to get it wrong and make mistakes without blaming the world and uncle Tom Cobleigh for their mistakes.
Rant over. (For now).

Hewitt - Whilst I am the last supporter of the FSA (they didn't see/act on Northern Crock, and god knows how many share advances ahead of news), I think you are bing disingenious.

The facts in the real world are that there are an awful lot of people out there who don't think the facts through properly (even if they are in possession of them, and given the way estate agents/brokers frenzy feed off clients, that can be excused), and even if they do are overwhelmed by the pressure to get on the housing ladder etc, that somebody needs to ensure that sense prevails.

Ironically, you haven't thought the effects through yourself of bad advice - ultimately it ends in exactly the credit crisis we are seeing now. Thus, rather than adding to costs, it is this protective behaviour in the long run that will help keep them down.

But no doubt you've a vested interest/myopia, like the boards/managers that run our banks at present !

Joe,
Inevitably, that kind of fuzzy thinking leads to more of the nanny state we all moan about now.
Is it McDonalds fault all our kids are porkers, or is it the fault of the parents?
Is it Tetleys fault when some 19 year old gets pissed and kills himself crossing a road?
Yes I have a vested interest in smooth running financial markets. We all do. I also have a vested interest in the NHS, even though I am not unwell. Yes I work in the industry.
Do you realise the industry is more heavily regulated, and with more beaurocracy than the NHS? Or education? But it patently does not work, otherwise the problems would not be here. May I venture to suggest that when massive regulation fails, more regulation is unlikely to improve matters.
Myopia is currently the preserve of those who argue regulation should increase or keep the status quo. Its effect, as proven by recent events, is the opposite of what we all want - better services.
The effect of increasing the burden is to increase costs, but you lot don't want to pay large fees for advice. You want it free or cheap. The result is that as costs rise disproportionatly, advisors get paid less and less. Lower salaries result in, you guessed it, worse advisors as the better ones head off to earn real money.
Result - lower quality advisors = lower quality advice = greater regulation, and on it goes.
Tell me if you go to the supermarket and buy a tin of beans. Does the retailer employ someone to stand there telling you that they are full of protein, but to be wary of the salt and sugar quantity? No?
Of course not, but will you sue them when your heart gives out?
No. Thats ridiculous. You can read on the tin and make your own mind up. If you can't understand it you can always ask a nutritionalist.
With financial services you expect an expert to tell you all about it. Thats fine. You cannot expect him to judge whether you can always afford it.
And remember, all mortgages come with legal advice. You have no excuse for not understanding it, unlike the beans.
No. There are 3 areas of the law that apply in almost all circumstances that the government ride roughshod over in this arena.
Volenti non fit injuras. You know the risks of a long term contract. If your circumstances change, how can you blame someone else? You voluntarily run the risk.
Res ipsa locquiter. You have all the details and access to legal advice, it is all written down and signed by you. Providing the contract doesn't change, how can you complain. Let the facts speak for themselves.
Caveat Emptor. Let the buyer beware. No advisor ever holds a gun to anyones head. They advise, you decide.
If we really want better service and a cleaner industry, then lets reduce the governance. Let the market decide acceptable lending and let the market pay for quality advisory and underwriting staff. That may stop another credit crisis. Employing advisors and underwriters on McWages definitely wont.
Alan

BTW, Joe.
Had my staff advised people 10 years ago not to take an interest only mortgage, but stay renting instead, you would have been at the front of the queue to sue the arse off everyone I ever met, because that advice would ahve been shockingly bad. It would have lost them thousands.
You now argue we should have done exactly that for the last few years!!
Tell you what. We will follow it to its logical conclusion and my company will be responsible for any change in circumstances ever, regardless of how outrageous they are.
When someone dies and their wife can no longer afford the mortgage because they cancelled the life cover we insisted on, that will be our fault.
Might sound stupid, but it is not nearly as stupid as arguing we should have foreseen the current economic climate several years ago. The first is predictable. The second was not.
And think through your argument about someone taking responsibility for talking sense to these people. If I had told a young couple 10 years ago not to buy a house, they couldn't afford it, do you really believe they would have agreed and stayed put? Get real.
They would have trotted off to the local branch of the Halifax and taken whatever they could get. They would have been in the same mess, because banks do not advise, but I would have saved them a few quid in the meantime by ensuring they got the best possible deal in the UK. Yet somehow I am a pantomime villain for that? Strange.